It is a mistake to assume that the state alone is responsible for improving infrastructure and can deliver it more cheaply than the private sector, says Planning Minister Trevor Manuel.
He questioned the controversial decision by the Cabinet last week to veto a deal between Telkom and South Korea’s KT Corporation, which would probably have resulted in lower data prices for consumers.
Deputy President Kgalema Motlanthe on Tuesday praised South Korea for propelling itself into the top-eight richest economies in the world by setting up a knowledge-based economy.
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"Even when lucrative offers are on the table we seem not to be able to utilise them," Mr Manuel told a conference yesterday organised by the Bureau for Economic Research.
"We think we as a state can deliver more cheaply than the private sector."
KT was set to buy a 20% stake in Telkom for R3,3bn - a badly needed cash injection for the ailing company - but that would have diluted the government’s 39,8% share in Telkom.
Mr Manuel said capacity was a "fundamental challenge" in implementing the plans to upgrade SA’s infrastructure.
The government aims to spend R845-bn over the next three years to improve roads, railways and ports, increase power supply and improve social infrastructure.
"This notion that the state should be responsible for delivery ... is a non-starter. If we want transformation, a lot will emerge from partnerships (with the private sector)," Mr Manuel said.
His comments are the strongest acknowledgement yet by a Cabinet minister that the government lacks capacity to deliver on its infrastructure plans.
Last week, Transnet CEO Brian Molefe said that possible capacity problems were one of the threats to the group’s R300-bn investment programme.
Grahame McCaig, MD of construction and engineering group Aveng Grinaker, told the conference he was "shocked" by the dilution of skills when he returned to SA after an 18-year absence.
"It’s not just general management skills but trade skills ... manufacturing and construction productivity are going down.
"We need people who can use their hands ... it’s not just a South African issue, but it needs to be addressed very urgently."
Mr McCaig said more than 80% of his firm’s R34-bn turnover in the financial year 2010-11 was generated by private sector projects. Lack of engineering skills in the government and municipalities was responsible for the lack of public sector participation.
A Presidential Infrastructure Co-ordinating Commission study released last month counted 5515 engineers in the public sector.
Mr Manuel said infrastructure should be paid for by its users, although the state had a role to pay in "lengthening the payback period". But the poor should be shielded from this, he added.
He was critical of the idea that high wage settlements would boost demand, saying they would only lead to greater poverty and inequality. Finance Minister Pravin Gordhan has pledged to keep public sector pay rises in check this year, but unions are already threatening action as their demands are not being met.
Global rating agencies have warned that the outcome of the negotiations could affect SA’s investment grade credit rating.
It was "necessary for the state to have the best sovereign rating that it can", Mr Manuel said.